TL;DR
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If you want to get paid to process transactions on the Ethereum network, you need to deposit (stake) 32 ETH (~$60k) and have a bunch of specific hardware/tech know-how.
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LSDs let folks skip all that by setting up the hardware and getting everything working – then let others contribute any amount of ETH to their staking pools, earning ~4% p/y.
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Here’s where the ‘cartel’ part comes into the story: there’s one company (Lido) that makes up 74% of the liquid staking market!
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This centralization opens Ethereum up to regulatory scrutiny.
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The solution? Make solo staking easier. Lower the 32 ETH barrier, and make the set up process idiot proof.
Full Story
You know that episode of Community, where Abed gets a job at the cafeteria so he and his friends can get first dibs on chicken fingers?
Yeah, well, there’s a worry that something similar is happening with Ethereum.
Specifically with liquid staking derivatives (LSDs) – and before you scroll away – it’s not as complex as the name suggests!
Basically, if you want to get paid to process transactions on the Ethereum network, you need to deposit (stake) a minimum of 32 ETH (~$60k) and have a bunch of specific hardware / tech know-how to get started.
Then, you can start processing transactions / earning – and the more ETH you stake, the more you earn per year.
LSDs let folks skip all that noise.
They set up all the hardware and get everything working – then let others contribute any amount of ETH to their staking pools, where they earn ~4% return per year.
Here’s where the ‘cartel’ part comes into the story:
There’s one company (Lido) that makes up 74% of the liquid staking market!
That’s a dominant position that would be celebrated in most circles of business, but in crypto it’s a big worry.
Because if Lido were to be hit with lawsuits from government bodies, saying they need to stop processing certain transactions for certain people – then crypto starts to look a lot like the banking system.
But here’s the real problem:
You know who else doesn’t like centralization in the cryptocurrency space? The US government.
Cryptocurrencies that can’t prove themselves to be sufficiently decentralized have a high likelihood of being regulated into oblivion. Not good.
The solution?
People much smarter us are suggesting this:
Make solo staking easier. Lower the 32 ETH barrier, and make the set up process idiot proof.
Sounds good to us.
